Senior Watchdogs Sought As U.s. Targets Medicare Fraud

December 08, 1998|By Merrill Goozner, Washington Bureau.

WASHINGTON — The White House announced plans Monday to crack down on price-gouging by Medicare's drug suppliers as part of its campaign to eliminate waste and fraud in the nation's $225-billion senior citizen health-care system.

Fraud fighters at the Health Care Financing Administration also hope to enlist the nation's elderly in their campaign to root out overbilling of the agency, as well as to establish special watchdogs nationwide to monitor the agencies charged with making Medicare reimbursements to medical providers.

The renewed attention on Medicare fraud and abuse comes as the government seeks ways to solve the long-term funding problem of the system, which at current growth rates is projected to go broke in 2008.

A special commission chaired by Sens. John Breaux (D-La.) and Connie Mack (R-Fla.) is scheduled to issue its report on ideas for saving Medicare next spring.

Since its health-care reform proposal failed in 1994, the Clinton administration has focused on rooting out fraud and abuse in existing federal health-care programs. A 1996 General Accounting Office report suggested that 14 percent, or $23 billion a year, of Medicare's payments were unnecessary. The administration says its efforts already have protected Medicare from $20 billion in false claims.

One of the more spectacular cases was concluded in July when officials at Illinois' Blue Cross and Blue Shield agency pleaded guilty to false billing practices and returned $144 million in overpayments and fines.

Now the government wants to open a new front by going after overpayments to drug companies and their vendors. The administration will ask for legislative authority in the budget it submits to Congress next February.

"Under current law, Medicare loses hundreds of millions of dollars each year by paying as much as 10 times more than the private sector does for certain drugs," President Clinton said Monday.

The administration has specifically targeted Epogen, the anti-anemia drug manufactured exclusively for Medicare-funded dialysis patients by Amgen Inc., based in Thousand Oaks, Calif. A November 1997 report by the Health Care Financing Administration's inspector general said Medicare routinely pays clinics about 10 percent more for Epogen than Amgen charges at the wholesale level.

Reducing the price the government pays for Epogen by 10 percent would save the government $320 million over five years, according to the HCFA. Patients who make co-payments would save about $80 million.

A separate inspector general's report issued last month said similar overpayments occurred with 34 drugs administered to Medicare patients in hospitals, where Medicare pays from 3 to 10 times the wholesale price. Medicare could save $690 million over five years by reimbursing the hospitals for their actual costs, the report said.

The administration's efforts to root out fraud will include a new program to go after private insurers who let Medicare pick up the tab for patients covered by private insurance. The president also announced plans Monday to crack down on community mental health clinics that bill Medicare for fictitious services.

The two measures would save Medicare $810 million over five years, according to administration projections.

Meanwhile, the HCFA has begun hiring outside contractors to monitor the agencies responsible for approving and paying Medicare claims to clinics, home health-care agencies, equipment suppliers and hospitals. Nearly a quarter of the 50 contractors nationwide have never reported a case of waste, fraud or abuse.

Sens. Dick Durbin (D-Ill.) and Susan Collins (R-Maine) are scheduled to hold a hearing in Chicago on Wednesday highlighting local efforts to combat fraud under the government's Operation Restore Trust program.

The Illinois program, coordinated by the Suburban Area Agency on Aging in Oak Park and the Northeastern Illinois Area Agency on Aging in Kankakee, is training senior citizens to look for scams and inflated bills.

"We've got to impress on recipients and taxpayers alike that the best way to protect Medicare is to eliminate fraud and abuse," Durbin said.

However, outside experts are divided on the extent to which Medicare's long-term funding woes can be solved through more aggressive policing of medical providers. Bruce Vladeck, former administrator for the HCFA who is now at Mt. Sinai Medical Center in New York, said the GAO estimate that Medicare could save $23 billion a year by eliminating fraud was "overdone."